Nothing New Under the Sun

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Directly above view of concentrated accountant using calculator while preparing tax forms sitting on sofa

There are many ways that individuals and businesses go about neglecting to pay taxes to the Internal Revenue Service (IRS). Some simply fail to file a tax return. Others who do file a tax return may claim false deductions or omit income to have a lower tax burden. Businesses can “cook the books” and make it appear like they made less money than they actually did. A Clarksburg, West Virginia man, who managed a local mall went a couple of steps further. He deceived Uncle Sam and committed tax fraud by combining a few tried and true illegal methods including fraudulently declaring bankruptcy and failing to pay withheld income taxes for his employees.

The West Virginia mall manager filed for Chapter 11 bankruptcy protection in 2017. (Chapter 11 bankruptcy allows a business to operate while continuing to pay off debts.) Over the next six months, the manager continued to collect rent from the mall tenants. (He was supposed to deposit the rent money into the business checking account. Instead, he used about $225,000 of the rent monies on things unrelated to the property management company, while concealing his illegal actions to the creditors of the bankruptcy estate.)

As if that were not enough, the mall manager neglected to pay the withheld income taxes for his employees and didn’t pay personal income taxes for four years. (That racked up a huge bill of more than $880,000 in back taxes. As you know, the tax man eventually cometh to collect.)

The 59-year-old fraudster from Clarksburg pleaded guilty to one count of concealment of bankruptcy estate assets and one count of tax fraud. As part of a plea agreement, the former mall manager will pay $225,000 in restitution to the bankruptcy trustee and another $880,000 to the IRS for back taxes owed. The fraudster is also looking at five years in prison plus another fine up to $250,000 for each of the two counts. (This case just goes to show you that there is nothing new under the sun when it comes to committing tax fraud, just a variety of creative attempts to make tax underpayments appear legitimate.)

Today’s “Fraud of the Day” is based on an article, Former local mall manager pleads guilty to tax evasion,” posted on WDTV.com on October 1, 2019.

CLARKSBURG, W.Va. (WDTV)– The manager of Pin Oak Properties, which operated the Middletown Mall, has admitted to bankruptcy and tax fraud.

According to U.S. Attorney Bill Powell’s office, 59-year-old Dietrich Fansler pleaded guilty to one count of fraudulent concealment of bankruptcy estate assets and one count of willful failure to pay over tax.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.